Foreign exchange – Greenback Extends Losses on Fed's Fee Reduce Hints

© Reuters. — The dollar was mostly lower in early trading in Europe Thursday, extending losses made on Wednesday after Federal Reserve Chairman Jerome Powell dropped his clearest hint yet that the central bank will cut interest rates at its next policy meeting at the end of the month.

By 3:45 AM ET (0745 GMT), the , which measures the greenback against a basket of developed-market peers, was at 96.553, rebounding a little from an overnight low of 96.463. That’s around half a percent lower than it was before Powell begun his .

In addition to Powell’s testimony, which warned of extended “uncertainty” weighing on the economic outlook, the of the Fed’s last policy meeting, released later on Wednesday, warned that some members “judged that uncertainties and downside risks surrounding the economic outlook had increased significantly over recent weeks.”

Some were less than convinced by the way the minutes arrived at conclusions that showed a clear bias to .

Helen Thomas, CEO of the consultancy Blonde Money in Oxford, said the summary amounted to “almost total capture of the Federal Reserve” by financial markets and an administration already eyeing next year’s election campaign.

“They’ll argue stuff could weigh on inflation. They’ll point to trade tensions, geopolitics, Brexit, whatever,” Thomas said. “It doesn’t matter. They’re cutting.”

The dollar’s biggest losses were against the , dipping as low as 107.86, before rebounding to just above 108 in Europe. It’s also sliding against the , which is now testing a nine-month high after the Bank of Canada left its on Wednesday.

The dollar also slipped against the , which has been better supported since data showing that the economy somewhat in May. Sterling was at $1.2534, up nearly a cent from this week’s lows.

The also hit its highest level in nearly a week to trade up 0.2% at $1.1271. Whether it goes on to test $1.13 may depend on the accounts of the last European Central Bank’s , which are due for release at 7:30 AM ET (1130 GMT). ECB board member is also due to speak at 6:15 AM ET (1015 GMT).

Powell will resume his testimony, this time to the Senate, at 10 AM ET (1400 GMT), while U.S. and data, both due at 8:30 AM ET (1230 GMT) may also generate some action in the dollar.

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